ESPP holding period: is it "two years" or "more than two years"?


J

Jonathan Kamens

My company has categorized as a disqualifying disposition the
sale of some ESPP shares which I executed two years to the
day after the grant date.

I.e., the grant date was 12/1/2009, and I executed the sale on
12/1/2011. This was also a year and a half after the shares
were purchased for me by the ESPP, so I'm confident that I've
satisfied _that_ part of the qualifying disposition
requirement.

What I'm trying to figure out is if I erred by selling the
shares on 12/1 instead of 12/2. I.e., is the holding
requirement actually "more than two years," i.e., at least two
years and one day, such that if I'd sold the shares a day
later I'd be paying the long-term cap gains rate on (some of)
the proceeds instead of the short-term cap gains rate?

I asked the ESPP administrator at my company why this
particular sale was classified as a disqualifying disposition,
and she sent back a useless answer which made it clear that
she didn't at all understand my question. I thought it might
be useful to post here about the "two years" vs. "more than
two years" question before going another round trying to help
her get a clue.

Thanks,

jik
 
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A

Arthur Kamlet

My company has categorized as a disqualifying disposition the
sale of some ESPP shares which I executed two years to the
day after the grant date.

I.e., the grant date was 12/1/2009, and I executed the sale on
12/1/2011. This was also a year and a half after the shares
were purchased for me by the ESPP, so I'm confident that I've
satisfied _that_ part of the qualifying disposition
requirement.

What I'm trying to figure out is if I erred by selling the
shares on 12/1 instead of 12/2. I.e., is the holding
requirement actually "more than two years," i.e., at least two
years and one day, such that if I'd sold the shares a day
later I'd be paying the long-term cap gains rate on (some of)
the proceeds instead of the short-term cap gains rate?

I asked the ESPP administrator at my company why this
particular sale was classified as a disqualifying disposition,
and she sent back a useless answer which made it clear that
she didn't at all understand my question. I thought it might
be useful to post here about the "two years" vs. "more than
two years" question before going another round trying to help
her get a clue.

For holding period following grant date, you begin to count
on the day after the grant date.
 
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A

Alan

My company has categorized as a disqualifying disposition the
sale of some ESPP shares which I executed two years to the
day after the grant date.

I.e., the grant date was 12/1/2009, and I executed the sale on
12/1/2011. This was also a year and a half after the shares
were purchased for me by the ESPP, so I'm confident that I've
satisfied _that_ part of the qualifying disposition
requirement.

What I'm trying to figure out is if I erred by selling the
shares on 12/1 instead of 12/2. I.e., is the holding
requirement actually "more than two years," i.e., at least two
years and one day, such that if I'd sold the shares a day
later I'd be paying the long-term cap gains rate on (some of)
the proceeds instead of the short-term cap gains rate?

I asked the ESPP administrator at my company why this
particular sale was classified as a disqualifying disposition,
and she sent back a useless answer which made it clear that
she didn't at all understand my question. I thought it might
be useful to post here about the "two years" vs. "more than
two years" question before going another round trying to help
her get a clue.

Thanks,

jik
from the regulation:

......... provided that the following conditions are satisfied—
(1) The individual must make no disposition of such share within 2 years
from the date of the granting of the option, nor within 1 year (6 months
for taxable years beginning before 1977; 9 months for taxable years
beginning in 1977) after the transfer of such share to him;

You goofed.
 

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